3 Money Problems That You Will Face in Maryland
Maryland is a wonderful state, but it’s expensive to live there — and it’s certainly expensive to run a business there. Here are three money problems that you will likely face as a business owner, and what you can do to take care of them:
Maryland was named the second least tax-friendly state in the country, based on its high income tax, property tax and “sin” taxes (taxes placed on alcohol and tobacco products). It kept this status for six years in a row. The median Maryland household pays approximately $1000 more in federal income taxes than the average United States’ household.
It’s not much easier for businesses. The corporate income tax rate is currently at 8.25%, which is one of the highest in the country. The Tax Foundation ranked all of the states based on their business tax climate: Maryland came in 40th place. While it’s not the last place position (New Jersey), it’s definitely not ideal for entrepreneurs trying to make it through tax season.
What Can You Do?
You can’t avoid tax season, but you can prepare for it. A lot of the struggle that comes with tax season is the stress of filing and the surprise of owing more than you expected.
If you want to skip those steps in 2020, you should start by hiring a bookkeeper to keep track of your business finances and organize your records. If you can’t afford to hire a bookkeeper, you can at least download accounting software and keep track of your financial records yourself. It will be much easier than rifling through piles of papers and receipts before the deadline and panicking when things don’t seem to be adding up.
Stay informed about Maryland tax updates and use an online tax calculator to get an estimate of what you will owe when the time comes. You won’t be shocked by the numbers this time around.
2. High Overhead Costs
Another money problem that businesses in Maryland are going to deal with is high overhead, especially in comparison to businesses in other states. Maryland has steep costs of living, so essentials like office supplies and utilities are going to take up a significant chunk of your budget.
The real estate is notoriously expensive. Finding an affordable office space is going to be very difficult. Most owners will have to settle for a space and make plenty of room in their budget for rent. On WalletHub’s ranking of states with the most expensive office spaces, Maryland came in 46th place — only California, New York and Alaska had ranked higher in a three-way tie for 47th place.
And most importantly, the labor costs are some of the highest in the country. Owners will have to direct considerable sums toward payroll, overtime, employee benefits and more. However, there are lots of perks that come with higher employee wages and incentives, like increased levels of productivity and easier employee recruitment and retention. Remember, there is a silver lining to this cloud.
What Can You Do?
The first thing that you should do is make a careful budget that gives you enough room to cover overhead costs. If it feels like it’s too tight, you can try to trim down variable costs like utilities and materials. You can adopt energy-saving practices to shrink your utility bills. You can get gently-used furniture and equipment instead of brand-new pieces. Or you can buy office supplies in bulk to save money.
If that doesn’t seem to be enough to cover the demands of overhead, you can get business funding in Maryland here and get access to some financial support in a hurry. You can use it for short-term plans like buying discounted materials or replenishing cash flow. Or, you can use it for long-term plans, like replacing equipment, purchasing inventory or boosting your working capital.
When your profits aren’t covering all of the overhead costs, you can always turn to this alternative funding provider in Maryland for some extra help — and get it fast.
3. Minimum Wage
You have probably heard the news about Maryland approving a bill to increase the minimum wage earlier this year. The state’s current minimum wage is a total of $10.10 an hour and the bill aspires to it raise it to $15.00 an hour. It’s not the only state that’s making this change. Here are the other states working toward a $15.00 minimum wage:
- New York
- New Jersey
A number of business owners were nervous about this bill passing because it would significantly increase their labor costs. Some have worried that the minimum wage hike would force them to raise prices in order to make up for the loss, which could drive customers away. Some have worried that they will have to close up their businesses for good.
What Can You Do?
Don’t panic. The minimum wage hike isn’t happening overnight. The bill intends to raise the minimum wage floor to $15.00 by 2025. You have years to prepare for the increase. If you’re concerned about how hikes affect employment rates for businesses, you should know that researchers have found that, historically, minimum wage increases do not lead to additional unemployment.
As good as that sounds, the change is still going to affect your business costs in the future. It’s going to cause some growing pains. The best thing that you can do is plan ahead and leave room in your budget to accommodate the wage shift long before 2025. That will make the adjustment much easier on you.
And if you’re worried that you’re not going to have enough saved up for this scenario, you can always get long-term funding to help you. You can click here to get funded today so that your business is completely comfortable by the time the wage shift comes into place.
Maryland may come with some money problems, but they’re nothing you can’t solve. You can prepare for tax season, high overhead costs and minimum wage hikes. And if you can’t do it on your own, you know that coming to First Down Funding is always a great back-up plan.